CACR 10: A State Income Tax

NH Constitution

What exactly is a CACR?

Before the House Ways and Means committee this session is Constitutional Amendment Concurrent Resolution 10 (CACR 10). Ways and Means is the committee responsible for taxation. CACR 10 is a measure relating to a state income tax. The sponsor is Democrat Representative Schamberg of Wilmot. He intends that revenue from any state income tax shall be returned to the cities, towns, school districts, and counties to assist in property tax relief. There are no co-sponsors of this measure.

What does this amendment to the constitution do?

This CACR provides that if an income tax is enacted in the state it can only be for the purpose of reducing real estate property taxes by the amount raised. The mechanics of the measure amend the second part of the constitution by inserting after article 6-b an additional section, 6-c. Rather than parsing the verbiage we should step back and understand what our Democrat legislature has proposed.

Point one: New Hampshire, at least nominally, has no personal income tax. Designating the use of non-existent funds through the use of a constitutional amendment would seem, at a minimum, premature.

Point two: Because New Hampshire does not have a personal income tax this bill opens the state up to unintended consequences. The author has not assessed what might fall under the broad title income tax.

Point three: New Hampshire does have an income tax on business. It is called the Business Profits Tax. If this CACR is enacted a large hole, about $650 million is made in funding the state government. That $650 million arguably, would be diverted to local property tax reduction. The diversion leaves the question: How do we make up for the revenue shortfall created at the state level?

Point four: Why is it a good idea to cross fund local property taxation with business income tax? How would those businesses get representation at all the communities across the state? Do we really want to uncouple the payment of taxes from the expenditure of the funds? Why is that a positive step to impose via the constitution?

What does this legislation tell us about our leadership?

Leadership is about more than trying to get Bernie Sanders style free goodies for ourselves with other people’s tax money which is legal though an ethically bankrupt practice of buying votes. The Democrat legislature is clearly trying to increase taxes. Because the state budget must be balanced common sense should tell us that when an existing tax is diverted, when we send funds to a different level of government; one of two things must happen. The tax dollars diverted must be replaced by revenue from another source, which means more new taxes. Or the programs funded with those dollars must be cut.

To put this in perspective if the BPT is sent to the municipalities as property tax reduction the hole created in the state revenue stream would require collection of about $480 per person from everyone in the state to refill the deficit created. So for a family of four that will cost you about $1,920 in new taxes payable to the state. And remember, the new taxes cannot be income taxes because they would go back to the municipalities. Will that impact your budget?

Just a side note, no taxing jurisdiction ever, has reduced property taxes because the state sent them money. Perhaps if we want to lower property taxes we should end the Statewide Property Tax which really is taxation without representation at the spending end. But that is a discussion for another time.

Conclusion:

Because there seems to be no recognition in this CACR of the impacts of the measure, it is important CACR 10 be defeated in committee. It should be voted inexpedient to legislate (ITL). But the importance of this measure goes equally to quality of leadership. Representative Schamberg sits on the Ways and Means committee. He should represent the most knowledgeable part of the Democrat party on this subject matter. This subject matter hits all of us in the wallet directly. This is what Democrat leadership looks like. It produces ill considered legislation with unintended consequences. I’m just saying, you voted for this kind of leadership New Hampshire…